Governor Kim Reynolds says she’s “OK” with a one-year delay in her proposed state grant program for state-funded preschools and licensed child care centers that partner to provide all-day care for four-year-olds.
Reynolds first discussed the plan in January, with a July 1 start date. “But the longer than it went on, it made it harder and harder to meet
the timeline that we originally put in place,” Reynolds said during an interview with Radio Iowa. “It is taking it right down to the wire and it’s a pretty tight turnaround.”
Democrats say it’s a shell game that takes money from functional programs and gives it to programs that do not yet exist. Senate Republicans recently voted to have the changes go into effect in the middle of next year after hearing concerns about making the changes immediately.
Another one of the governor’s policy bills that’s stalled in the legislature addresses energy policy. It would give the state’s major utilities, like MidAmerican and Alliant, the first chance to decide whether to build new energy projects before other companies could compete for the work. The Trump Administration has called the policy anti-competitive. Reynolds counters that requiring competitive bidding means a year or more delay before projects could start.
“I have a president that’s looking at reshoring manufacturing back to the United States. We already have a significant issue with natural gas in southeast Iowa,” Reynolds told Radio Iowa. “They have lost two or three potential economic developments in an area that could really use it because they do not have capacity for natural gas.”
Reynolds warns natural gas supplies are limited in north central and southwest Iowa as well and she said her bill will ensure energy projects of all kinds get off the ground as quickly as possible. “As we look to really bring development and have the opportunity to grow with what the president is doing, I wholeheartedly support what he is doing,” Reynolds said. “It’s going to be bumpy, but I think it’s going to be a tremendous opportunity for states and for this country to bring some of that manufacturing back.”
The Resale Group of Iowa, which represents 26 public and private utilities, argues a competitive bidding process should be used and giving MidAmerican and Alliant Energy first crack at transmission line projects will drive up the cost of electricity for small communities. MidAmerican Energy argues the quick restoration of power after the 2020 derecho shows the value of a “right of first refusal” policy in Iowa law.
The governor’s second try at cutting the business tax used to pay unemployment benefits is also pending in the legislature. Reynolds told Radio Iowa it’s a top priority for lawmakers to pass before the 2025 legislative session concludes.
“It’s a billion dollar tax savings, tax cut to our employers over five years,” Reynolds said. “That matters. It makes a difference.”
Reynolds has said Iowa’s Unemployment Trust Fund has too much money in it. “Quite frankly, we’re over collecting,” Reynolds said. “We’re sitting on nearly $2 billion.”
Iowa’s unemployment tax is 12th highest in the country. The governor’s plan would lower the top unemployment tax rate and reduce the taxable wage base by half. Last year, some business groups expressed concerns that if there’s an economic downturn, the fund would not have enough money to pay unemployment benefits. “And so I said I’m going to work with all of the groups that it would apply to,” Reynolds said, “and I got all of them on board,”
Reynolds added a message to employers in this year’s bill, suggesting what they should do with the tax break. “I’m asking them to put that back into their people,” Reynolds said, “you know, to really consider looking at wages and supporting the employees that make their companies great.”
The Iowa Federation of Labor has said the reason this business tax could be cut is because in 2022 Republican lawmakers reduced the number of weeks Iowans can receive unemployment benefits by over a third – from 26 to 16 weeks. Democrats say the state should be focused on helping Iowans who are losing jobs rather than on providing more tax breaks to businesses.
House Speaker Pat Grassley, the top Republican in the Iowa House, doesn’t rule out action on the governor’s unresolved policy priorities, but Grassley told reporters finding common ground among Republicans on state spending is the focus right now. “That doesn’t necessarily mean that those bills may not be considered,” Grassley said last Thursday, “I just think the expectation (from House Republicans) is ‘let’s settle the budget,’ so we can get session moving along.”
Members of the Iowa legislature are just “on call” for votes if Republican Governor Reynolds and GOP legislative leaders strike deals on budget bills. Another complication in completing the work of the 2025 Iowa Legislative session is that a dozen Senate Republicans have launched a budget boycott, refusing to support spending bills until the senate votes on restrictions for the proposed carbon pipeline route through Iowa.